There are a number of characteristics that make a great day trading stock. Traders will gravitate toward stocks with different combinations of these characteristics based on their available capital, typical position size, risk tolerance and strategy.
The characteristics that make a great day trading stock typically include significant daily volume (5M+), volatility, beta, being shortable and price. The use of Beta will depend on personal strategy, but could be used to provide information on hedging other positions or “pairs trading.” Volatility is the average percentage move the stock makes each day; the focus is usually on stocks that move more than 1% per day. For some traders, the more volatility the better. Price can be subdivided into three broad categories: low (<$15), middle ($15 to $90) and high (>$90). These categories are not an indication of value, only absolute cost.
These characteristics can be combined in different ways. For example, a stock with a low price, high volume and high volatility may be attractive, just as a high priced, high volume stock with high volatility may also be attractive. Not all traders necessarily want extreme volatility though, so high volume and moderate volatility, combined with a low/high price may provide adequate movement to consistently extract profit.
Based on these characteristics, here are 25 stocks day traders love, with the highest volume stocks listed first. All the stocks are shortable, at the time of writing.
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The social media giant does loads of daily volume, averaging over 60M shares. Volatility is also quite high, moving approximately 4.5% per day based on Average True Range (ATR) divided by price. The price also falls in the middle range; it is not so high as to alienate many traders, yet is high enough to attract a wide range or speculators, including day traders, hedge funds, mutual funds, swing traders and investors.
Micron Technologies (Nasdaq:MU)
A technology company that typically trades more than 30M shares a day, and moves more than 4% per day. It has a Beta of 1.78 making it quite a bit more volatile than the S&P 500 index. Priced in the lower portion of the middle range, it is accessible to nearly everyone.
J.C. Penney (NYSE:JCP)
The department store chain trades move than 25M shares per day, and moves on average 5% per day, with a Beta of 1.66. Priced in the low range, traders can even afford to take larger positions, leveraging the volatility for bigger gains/losses.
Research in Motion (Nasdaq:BBRY)
The BlackBerry maker trades more than 20M shares per day and moves more than 5% per day. The stock has a Beta of 1.64 and is also priced in the low range, making it an accessible day-trading stock for those with limited capital.
Petroleo Brasileiro (NYSE:PBR)
The integrated Brazilian oil and gas company trades more than 20M shares per day, and has average price moves of greater than 3.5% on a daily basis. Its Beta is 1.85 and its price borders on the low to the middle category. The $93B market capitalization (cap.) and price attracts a wide of array of funds, traders (day and swing) and investors.
The cell phone maker averages more than 20M shares a day in volume, and typically moves in excess of 2.5% in a day. It has a beta of 1.74, and while the price is in the low range, the near $25B+ market cap attracts day traders with limited capital, right up to large hedge funds.
The online deals service trades more than 20M shares daily and typically sees price moves of more than 4.5% from day to day. The stock began trading in 2011, so many traders still consider the stock very speculative (relative to more mature companies). With a price in the low range, combined with the speculative nature of the stock, it has a tendency to attract a lot of short-term traders.
The online search provider averages more than 20M shares a day and moves more than 3.5% per day. It has a Beta of 1.29 and is priced in the middle range. With a $30B+ market cap this stock also attracts a wide array of both long-term and short-term traders.
A communications services company, Sprint stock typically sees more than 15M shares exchange hands on a daily basis. The price will often move 4% or more from day to day, and it’s priced in the low range so day traders can capitalize on the volatility with large positions.
Regions Financial (NYSE:RF)
This U.S. bank averages more than 15M shares in daily volume, and often moves more than 2.5% per day. With slightly less volatility than some of the prior stocks mentioned, this will appeal to those day traders looking for a lower price stock, with good volume, but not extreme volatility.
Gilead Sciences (Nasdaq:GILD)
A biopharmaceuticals company that typically sees more than 14M shares change hands. While it has a Beta of 0.66, movements day to day often exceed 4.5%. It is priced in the middle range, and with a market cap of more than $100B. it appeals to a wide array of short-term and long-term traders.
Twenty-First Century Fox (Nasdaq:FOXA)
The entertainment company sees daily volume in excess of 14M shares, and has a Beta of 1.23. Daily movement is approximately 2.5%, appealing to day traders who want a balance of moderate volatility and volume for a stock in middle price range.
Morgan Stanley (NYSE:MS)
The investment broker sees more that 13M shares change hands in its stock daily. Often a key stock for determining the health of the financial sector, day traders are attracted to the 2.06 Beta, middle price range and 2.5%+ daily movements.
The online conversation tool began trading in 2013, so it doesn’t have a long history of stock performance. Relative to established technology companies, the stock is speculative, appealing to short-term traders. Average daily volume exceeds 13M shares, and average daily movement tops 4.5% per day.
This company operates in solar energy and semiconductor materials, and trades more than 12M shares per day. The stock has a Beta of 2.45 and can be very volatile, often moving in excess of 7% from day to day.
Delta Airlines (NYSE:DAL)
This major airline trades more than 12M shares per day, has a Beta of 0.97 and sees moves of more than 3.5% per day. The stock has a mid-range price.
Boston Scientific (NYSE:BSX)
This medical device maker averages more than 12M shares per day and has daily moves of approximately 3%. The stock has a Beta of 1.1 and is in the low price range.
MGM Resorts International (NYSE:MGM)
The casino resort chain routinely trades more than 11M shares per day. It has long been a highly day-traded mid-priced stock, due to its 2.17 Beta and daily moves of greater than 3.5%.
American Airlines (Nasdaq:AAL)
The airline is a sister stock to Delta Airlines, mentioned earlier, and therefore the two stocks often move in a similar fashion. Volume is more than 10M shares per day, and the stock is more volatile than its sister stock, often moving in excess of 4.5% daily. It’s mid-priced with a Beta of 3.85.
The electronics maker is one of the most recognizable brands in the world. Daily volume exceeds 11M shares and greater than 1% daily price moves are common. This is lower volatility than many other stocks in percentage terms, but because of the high stock price (absolute, not a reflection of value) the moves are large in absolute dollar terms. Apple’s Beta is 0.73.
Tesla Motors (Nasdaq:TSLA)
The electric vehicle maker is another high priced stock (absolute, not a reflection of value) that attracts a wide array of speculators. Daily volume exceeds 9M shares, the stock’s Beta is 0.36 and daily moves are approximately 5%.
This visual computing company routinely trades more than 8M shares per day, has a Beta of 1.65 and has daily moves in excess of 2.5%. It is a low- to mid-priced stock.
Cliffs Natural Resources (NYSE:CLF)
This mining company has all the markings of a great day trading stock. Volume exceeds 8M shares per day, Beta is 2.34 and daily price movements are often greater than 4%. The stock is in the low- to mid-price range, making it accessible to nearly all day traders.
Pandora Media (NYSE:P)
The internet radio company is one of the most volatile on the list. Daily volume is greater than 8M shares, it’s mid-priced and daily price moves are frequently greater than 8%.
Valero Energy (NYSE:VLO)
The petroleum company has daily volume of more than 8M shares, a Beta of 1.71 and daily average moves in excess of 3%. The stock is heavily traded by day traders around the EIA Petroleum Status Report (Wednesdays at 10:30 EST), due to the sharp price moves that can result.
The Bottom Line
Stocks moves in and out of favor with day traders. Decreases in volatility may cause day traders to gravitate toward different stocks, or long-term price changes may make the stock too high or low to warrant day trading. Volume is also pivotal; without significant daily volume, a large number of day traders aren’t likely to be interested in a stock. As long as these stocks continue to see high volume and good intra-day volatility, they are likely to remain highly tradable for day traders.
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